Country-by-country multinational tax reporting ‘will happen’, says McGuinness

Majority of EU member states believe 'its time has come', commissioner says

European Commissioner for Financial Stability, Financial Services and Capital Markets Mairead McGuinness.

European Commissioner for Financial Stability, Financial Services and Capital Markets Mairead McGuinness.

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A new EU law opposed by Ireland that would force multinationals to reveal their tax payments and activities per member state is on its way, and prospects have brightened for a global deal on digital taxation as well, European Commission member Mairead McGuinness has said.

The Republic was defeated on the so-called country-by-country reporting proposal for multinationals with revenue over €750 million in a key vote last month that cleared the way for the law, which has been stalled by opposition since 2016.

A majority of EU member states feel the “its time has come”, Ms McGuinness told the Irish Times. “The truth now is everyone has to row in behind country-by-country reporting,” she added. “And it will happen.”

Ireland argued that the proposal was a tax measure, and therefore needed to be approved by finance ministers – a route that would require unanimous support and grant Ireland a veto.

Instead, the proposal has come through the EU’s competitiveness council, made up of national EU trade and enterprise ministers rather than finance ministers, which means the law required only a qualified majority to pass.

“There were a small number of countries that were against it on a legal basis,” said the former Fine Gael MEP for Midlands-North West, who succeeded Phil Hogan as Ireland’s commissioner last year.

“Some member states that were of that view moved towards the majority that felt country-by-country reporting, its time has come, and we needed to move on from it.”

National positions

Ms McGuinness leads the Financial Stability, Financial Services and Capital Markets Union portfolio at the European Commission, meaning that bring into force the taxation proposal falls under her brief. Commissioners are required to leave behind national positions when the joint the executive, as they represent the whole EU.

Asked whether the inauguration of the administration of President Joe Biden in the United States had increased prospects of a global deal on digital taxation, Ms McGuinness said: “I think the atmosphere is much better for an agreement”.

“Citizens want both transparency and fairness,” she said.

Negotiations for an OECD agreement on the issue were stalled under the administration of Donald Trump. The European Commission has said it supports an OECD agreement, but if this is not possible it will move ahead with plans for an EU-only digital tax, a concern to Ireland in case it encouraged tech multinationals to relocate elsewhere.

“We want an agreement at OECD level,” Ms McGuinness said. “But we are prepared and ready to work towards a European solution.”